Nirmal Bang view on SCIL
We have marginally revised EPS estimates and raised target PE from 32x FY26E to 38xJune’26E based on healthy EPS CAGR of 40% over FY24-FY26 - implies PEG of 0.95x. The higher multiple is on the back of improved outlook for FY25E/FY26E in terms of margins and earnings growth. The new PE compares with median PE of 42.1x.
Key catalysts:
Healthy monsoon forecast – already the deficit has turned into a surplus for Kharif FY25,
as per latest rainfall updates.
La Nina is likely to set in over the next one month which is a positive for agronomical
conditions.
SCIL launched 6 new products in FY24 – 3 herbicides, 1 insecticide and 2 fungicides
Agrochemical input prices and de-stocking have mostly bottomed out, as per our channel
checks. Also, SCC Japan’s latest PPT has presented a bullish outlook based on
revival in its CPC business for April-March’2025 (FY24 as per SCC norm)
SCC Japan is also focusing on more sustainable bio and botanical products for crop
protection based on its vast experience and R&D expertise; this is in line with its focus on
regenerative agriculture, as per SCC’s April’24 strategy PPT.
SCIL’s new product launches as well as capacity creation are aimed at securing further
business in Agrochem and Specialty Chemicals. SCC Japan is shifting focus to
regenerative agriculture, specialty chemicals for mobile display (OLED) and power
semiconductors - according to SCC’s strategy PPT.
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